Four Firms to Settle Charges of Overbilling the Government

Four major consulting and accounting firms agreed to pay more than $25 million to settle charges that they had overbilled the government for travel expenses, the Justice Department said Tuesday. The settlements with BearingPoint Inc., Booz Allen Hamilton Inc., Ernst & Young and KPMG follow a deal struck last summer with accounting firm PricewaterhouseCoopers, which agreed to pay $42 million to resolve a similar complaint.In all cases, the government alleged that the companies failed to disclose that they were receiving volume discounts and rebates from airlines, hotels, car rental companies and credit card companies on travel billed to government contracts. Instead, they billed the government the full retail rate, never passing on the discounts of up to 40%, the government charged. That violated the firms' contracts and government regulations, according to the Justice Department, which filed suit against the companies in U.S. District Court in Los Angeles. The firms neither admitted nor denied guilt, but each agreed to pay two-to-three times the amount prosecutors estimated that they had overbilled the government, Assistant U.S. Atty. Howard F. Daniels said. BearingPoint, formerly KPMG's consulting arm, agreed to pay $15 million. KPMG settled for $2.8 million, Booz Allen agreed to pay $3.4 million and Ernst & Young settled for $4.5 million. The suits were filed in 2001. BearingPoint was part of KPMG at the time the travel expenses were submitted. It was spun off as a separate consulting firm in February 2001. "We are pleased to have reached an agreement with the government on this matter, recognizing that this was a liability we inherited for a program we did not create," BearingPoint spokesman John Schneidawind said. "We believe we would have ultimately been vindicated in court. A settlement in this matter without admitting wrongdoing allows us to continue to focus on our customers, rather than being distracted by prolonged litigation," he added.